Editor’s Note: Blurring, Busting and Chopping

Abbie Westra, Director, Editorial, CSP

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“Consumers don’t [make eating] decisions in a segment. We think about not ‘grocery or store or restaurant?’ but ‘cook or not cook?’ ”

That’s Justin Massa, founder and CEO of Food Genius, reflecting a sentiment increasingly felt by both the foodservice and retail industries. The lines between foodservice channels have been blurring for a while now—in fact, CSP has hosted an event based on just that premise for seven years, our FARE conference. But those aren’t the only walls coming down.

Historically, we’ve focused on how McDonald’s is stealing share from Burger King, or how family casual is losing traffic to fast casual. But more and more, foodservice operators are targeting their one shared foe: the home kitchen. As a result, more suppliers, operators and analysts are looking to retail for ideas and dollars to steal--and vice versa.

“Restaurant industry growth is outpacing CPG industry growth by a sizable margin,” Susan Viamari, editor of IRI’s Times & Trends, told me in an interview earlier this year. “By adopting a focus on winning ‘share of stomach,’ rather than just share of CPG spending, marketers can adjust their analyses and strategies and reap significant rewards.”

So CPG firms are sharpening their blades with an eye on restaurants. Meanwhile, on the other side of the aisle, restaurants are seeing more and more foodservice dollars go to off-premise sales. Fifty years ago, the majority of foodservice traffic was on-premise. Today, more than 70% is consumed off-site.

Pair that staggering number with the continued growth in retail foodservice and the trend becomes self-evident: Yes, consumers want to eat what they want when they want it, but also where they want. The winning operator is the one who can promise that—be it a sit-down restaurant with curbside pickup or a food truck weaving through town.

Another mega-trend perpetuating this tug-of-war over food-dollar spending is snacking. Convenience stores may still be getting their footing in the foodservice game, but they have a major upper hand over restaurants: a bounty of packaged foods and beverages. How far away are we from McDonald’s installing racks for chips, granola bars and meat snacks? The silos are already breaking down inside the country’s biggest food companies to allow more foodservice products to be shipped to retailers getting into the foodservice game; why wouldn’t the supply chain move in the other direction too?

So what are operators saying? In our annual State of Foodservice Study, which we conduct in conjunction with FARE, we asked operators whom they consider their greatest foodservice competition. Just 19% of QSR/fast-casual operators identified c-stores, while 52% of c-stores chose QSRs and 40% chose fast-casual restaurants.

So not surprisingly, QSRs are less anxious about retailers than the other way around. But as our reporter Robert Lillegard writes later on in this issue, c-stores have foodservice; QSRs are foodservice.

While c-stores are battling restaurants on one front, they’re also engaging in a defensive attack against drug chains moving onto their corners, dollar stores stocking cigarettes and mass merchandisers testing small-format stores—and all are fighting to hold ground against e-retailers.

How’s that for a state of the industry? I feel like I’m watching an episode of “Game of Thrones” and I can’t quite remember who just cut off whose head, what banner they’re flying and—wait, aren’t they brothers?

It’s not just restaurants and retail foodservice watching one another; it’s also foodservice and CPG, or really anyone with food to sell.

So who will win?

I’ll tell you whom I’m placing my bets on: the consumer.

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